I’ve been in business for more than 20 years and every so often, I think back on what life was like as a young business owner. Of course, it’s important not to dwell on the past and be forward-thinking, but you can learn from the wrong turns you made in the past. Additionally, I can impart my wisdom and everything I’ve learned to budding entrepreneurs so they can benefit from what I’ve learned over the years.
I’ve gathered together the top 12 things entrepreneurs should know before starting their own small business. While making mistakes is all part of the process, I hope that my advice can help you avoid making the same errors that I did.
1. Manage Your Time Effectively
Keep the old saying “time is money” at the forefront of your mind at all times. Don’t let anyone waste your time, even yourself.
Qualify leads before you agree to a meeting. This can include having prospective clients fill out a survey prior to booking a meeting so you can ensure your services align with what they’re looking for. Have a hard stop locked in place when you conduct meetings, ideally no more than 30 minutes.
If you volunteer or serve as a board member for various organizations, remove yourself from ones that don’t allow you to make valuable connections that benefit your business. You want to focus on profit-generating activities. If there’s something you’ve been working on for a while, like a new revenue stream, block out a day in your calendar to finish the project off. You’ll never get it done if you keep yourself busy with other tasks.
2. Pay Attention to Cash Flow
One of the primary goals of your business is to make money. It’s the engine that drives your business. Stay organized with your monthly cash sources, such as owner investment, client payments, and loan funds. Track all of your expenses, including inventory, payroll, shipping, and your own salary.
Positive cash flow is driven by planning and organization. It’s vital that you know how much cash in hand you need to operate your business each month. This will help you determine how much you need to sell each week to pay your bills.
One thing you should do before you start your business is to open a separate checking account for your business-related expenses. Ensure that you put away at least 30% of everything you earn into a separate account for tax purposes.
3. Develop a Niche Target Audience
When my business was first getting off the ground, I wasted a lot of money and time chasing down all kinds of different leads. Just because you can doesn’t mean you should pursue any and all opportunities. You need to focus on a certain area so you can build up your expertise and authority.
If you offer a product or service that everyone can use, no one will. It’s far more profitable to learn all that you can about your niche audience so you can solve their specific problem. You want to be their “go-to” resource when they need assistance.
4. Double Your Price
That’s right; you read that correctly. Whatever you think you should charge for a particular service or product, double it. So many new business owners lowball themselves. Don’t think you need to charge less just to secure new clients. You’re selling them on your value, not price. The easiest way to ensure you’re doing that is to double the figure that’s in your mind.
You can figure out how to include value-added services that don’t cost a lot to make it a win-win for you and your client. The only exception to this rule is if a client told you that they have a specific budget. Then, you can craft what services you offer them based on that price but still remember not to undersell your value based on their budget.
5. Don’t Let Your Customers Down
This isn’t always obvious to new business owners. You need to go above and beyond to meet your client’s needs or keep a promise that you made to them. If that means staying up all night to re-do work that wasn’t done properly the first time in order to meet a deadline, then so be it.
An unfortunate consequence of not meeting your client’s expectations is potentially eating rush fees or having to physically deliver a package yourself to them. Whatever the cost is, it doesn’t matter. You’re only as good as your word to your clients. Fulfill all your obligations to them so you can nurture a long-term relationship and potentially get referrals from them.
6. Be Mindful With Your Line of Credit
When using your line of credit, do so for short-term expenses only. You’ll want to borrow money on a line of credit for no more than 90 days at a time. Your primary goal should be getting it back down to $0 as soon as possible. This ensures that you always have access to it when you need it most, especially if a customer pays you late. If you run a balance, ensure that you’re making payments on the principal, not just the interest. If you only pay on interest, the bank can pull your line of credit at any time.
7. Treat Your Kids and Spouse Like Your Top Customer
Don’t let your small business be all-consuming. Set aside a block of time to spend with your family at least once a week. Schedule date nights with your spouse. Keeping your family happy will ensure you have a healthy work-life balance.
Your family should also understand that your business is not just your personal mission. They’re part of your success team as well. Empower them to pack their own lunches, help around the house, and become more independent. When you’re head-down in your business, it’s hard for you to be on top of everything at home as well. There will likely be a few complaints initially, but they’ll become proud of your accomplishments over time.
8. Your Accountant Should Be Your Business Advisor
Don’t only talk to your accountant at tax time. Speak with them throughout the entire year. Utilize your monthly financial statements to run your business. You should schedule meetings with your accountant quarterly to strategize about your business and its finances. In the fall, you should meet with them to discuss tax budgeting and planning for the upcoming year. If you wait until it’s time to file taxes to talk with them, it’s too late to discuss strategy.
9. Build Your Team ASAP
Running a business by yourself can be a lonely road, especially if you’re a one-person army. Business owners should be focused on the most highly-valued activities like sales, maintaining customer relationships, and bringing in new business.
Tasks like blog management, invoicing, and preparing your weekly newsletter are all things you can outsource. Getting quality support is the fastest and most profitable way to navigate the administrative side of your business. One avenue to take is hiring a virtual assistant. They can take a lot of those tasks off your plate.
10. Make Quality Hires
With point #9 in mind, ensure that anyone you hire is qualified and dependable. If you want your business to grow, you need to hire good people. Don’t just hire someone simply because you can afford them. Cheap doesn’t always mean that they’ll do the job to your specifications. Most members of your team are the front line to your customers and represent your brand. Not only do they need to be professional, but they need to be trained, so they know what to do. Don’t assume that they know what to do. Demonstrate how you want them to interact with your customers and deliver customer service.
11. Failing Doesn’t Mean You’re a Failure
It can be hard not to take things personally in business, but you need to do your best not to. You’re going to make mistakes along the way but don’t swell on them. Give yourself a short amount of time to be disappointed or angry and then move on.
The important thing to remember is to make sure you learn the lesson. Keep all self-talk positive, and don’t give any airtime to any person speaking poorly to you. You might have made a mistake, but you’re not a dummy. Failing at something just ensures you’ll be smarter next time.
12. Focus on One Thing
Being an expert at one thing guarantees that you’re the obvious choice to work with. For example, imagine the Army is hiring a company to make a new commercial. Who do you think gets the job: a generic company with industrial production experience or a veteran-run video production company specializing in military videos. Focus on one service for one audience, and new clients will come to you.
What I Wish I Knew Before Starting My Own Business
I hope these 12 things have helped shed some light on areas you should pay attention to before starting your small business. When you start a business, you’re wearing many different hats and trying to juggle a variety of things. Be patient with your business and with yourself. Surround yourself with positive and like-minded people who’ll help you achieve your goals fast. Stay focused on your customers and never let them down. You’re golden if you keep that in mind.
Do you have something you wished you knew when starting your small business? Drop a comment with it below!